Thursday, July 19th, 2012
The Department of Labor says that the number of people working past the age of 65 is at a record high. If you are a still-employed senior, you face some confusing choices about Medicare. Should you sign up for Medicare while you are still getting employee benefit insurance? Or do you wait until your benefits are about to end to sign up? And if you have both Medicare and employee group health benefits, which pays for what?
The answer is — it depends. But if you aren’t careful, you might waste money paying premiums on coverage you don’t need. Or, you might miss deadlines and face delays in getting coverage you do need. And that could be tragic, because seniors are more likely than younger people to suffer life-threatening diseases, such as heart disease or mesothelioma.
First, be sure you understand all the “parts.” Very basically, you need to consider three parts –
- Medicare Part A covers hospital expenses. You don’t have to pay premiums for Part A.
- Medicare Part B covers outpatient expenses. There is a monthly premium that varies depending on your circumstances.
- Medicare Part D covers prescription drugs. Again, the premium varies depending on your circumstances.
Note that you are enrolled in Part A and B automatically if you are on Social Security. Otherwise you have to sign up for the three parts on your own. If you are retired, the enrollment period for parts B and D begins three months before you turn 65 and ends four months after you turn 65. If you miss this enrollment window, your coverage will be delayed and your premiums will be higher.
But let’s say you turn 65 and you are still working. You get good health insurance from your employer. Do you have to sign up for Medicare? No; the enrollment rules are different if you are still working. Should you sign up for Medicare, anyway?
No matter what, you might as well sign up for Part A. It won’t cost you anything. As for B and D — it depends.
If your employer has more than 20 employees, the group health plan you get from your job will be the primary payer of your medical bills. That means Medicare will not pay for something if your group plan covers it. For most people in this situation it wouldn’t make sense to pay premiums for Medicare parts B and D.
If your employer has fewer than 20 employees, however, you should sign up for parts B and D as well as A as soon as you are eligible. Your group plan will not pay for anything that could have been paid through Medicare. For more details, see “Medicare and Other Health Benefits:Your Guide to Who Pays First” from the Centers for Medicare and Medicaid Services.
When you do retire, you may be eligible to continue your employee benefits for a while — usually 18 months — through the COBRA program. This may be a good idea for you if, for example, your spouse isn’t eligible for Medicare yet and depends on your employee insurance.
But be careful — once you leave your last job, you have four months to sign up for part B. If you miss that window, you will be penalized with higher premiums. There are no penalties for delaying enrollment in part D, however.
How will mixing COBRA and Medicare work? The answer may vary depending on what state you live in and whether you are a public employee or work for a private business. Consult the Medicare and Other Health Benefits guide to find out where to go to find out about your particular situation. The guide also has advice for veterans with VA or TRICARE benefits.